1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 REPORTER'S TRANSCRIPT 7 APRIL 30, 2019 8 9 10 ITEM K 11 OTHER ADMINISTRATIVE MATTERS; 12 ITEM K4 13 LEGISLATIVE, RESEARCH & STATISTICS DIVISION 14 CHEIF'S REPORT 15 16 17 18 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 3 For the Board of Honorable Malia S. Cohen Equalization: Chair 4 Honorable Antonio Vazquez 5 Vice Chair 6 Honorable Ted Gaines First District 7 Honorable Mike Schaefer 8 Fourth District 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 For the Board of Brenda Fleming 13 Equalization Staff: Executive Director 14 Mark Durham Chief 15 Legislative, Research & Statistics Division 16 David Yeung 17 Chief County-Assessed Properties 18 Division 19 Toya Davis Clerk 20 Board Proceedings 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 APRIL 30, 2019 4 ---oOo--- 5 MS. DAVIS: Our next item is Item 4(a) and 6 (b), Legislative, Research & Statistics Division 7 Chief's Report. 8 MS. COHEN: Thank you. 9 MS. DAVIS: This item is informational only. 10 It does not require a vote. 11 Mr. Durham. 12 MS. COHEN: Welcome back, Mr. Durham. 13 MR. DURHAM: Thank you so much. 14 Good afternoon, Chair Cohen and Honorable 15 Members. I'm Mark Durham with the Legislative, 16 Research & Statistics Division. And I'll provide you 17 with an update on legislation. 18 First, let's go over the key legislative 19 dates that we're tracking. 20 May 31st is the last day for each House to 21 pass bills introduced in that House. 22 September 13th is the last day for any bill 23 to be passed. 24 October 13th is the last day for the 25 governor to sign veto bills by the Legislature on or 26 before September 13th. 27 And I think you should be getting a handout, 28 a little outline that you guys requested at the last 3 1 meeting. 2 MS. COHEN: Mr. Durham, may I just interrupt 3 you. And I just want to say thank you. This is 4 perfect. 5 MR. DURHAM: Okay. Good. Thank you. 6 MS. COHEN: And I'm very grateful that you 7 incorporated this into your presentation. 8 MR. DURHAM: Perfect. Thank you so much. 9 MS. COHEN: You may continue. 10 MR. DURHAM: Great. 11 Next, I will discuss the -- excuse me -- the 12 committee hearing dates and BOE's involvement. 13 First is the Assembly Budget Subcommittee 14 No. 4. The BOE is not scheduled for the April 30th 15 hearing. 16 There's also one on May 7th that the BOE is 17 scheduled for; however, when I talked to the 18 committee, right now we may be taken off that 19 hearing. Basically because we don't -- there's no 20 BCPs. 21 And you asked earlier about, you know, 22 budget-wise, how are we sitting. We haven't heard 23 anything. So as Ms. Fleming said earlier, it's 24 better not to be a part of these hearings. So we're 25 not going to be cut in the budget. 26 MS. COHEN: Thank you. 27 MR. DURHAM: You're welcome. 28 The Senate Budget and Fiscal Review 4 1 Subcommittee No. 4 for May 2nd, again, I checked with 2 the committee, and right now the BOE is not scheduled 3 for that meeting either. 4 Moving onto the legislative bills of 5 interest for the BOE. 6 First off, ACA 2, there's been no change in 7 this, and it has not been assigned a committee. 8 For AB 576, this is the Nazarian, State 9 Board of Equalization transfer of duties. 10 On April 22nd this bill was heard in the 11 Assembly Rev. and Tax Committee. Four people spoke 12 in opposition of the bill, which included Ms. Cohen 13 and Ms. Fleming. It was subsequently passed onto the 14 Appropriations Committee, and is scheduled for May 15 1st. So tomorrow to be heard in the Appropriations. 16 For Assembly Bill 872, this is the property 17 taxation change in ownership on parent-to-child 18 transfer. This was heard in the Assembly Rev. and 19 Tax Committee on April 11th. And it has been amended 20 and re -- 21 MS. COHEN: I'm sorry. Was it heard on 22 April 11th or April 22nd? Our notes say April 22nd. 23 MR. DURHAM: Oh, I'm sorry. It is 24 April 22nd. 25 MS. COHEN: Okay. 26 MR. DURHAM: And it was amended and 27 re-referred back to the Assembly Rev. and Tax 28 Committee. 5 1 MS. COHEN: Mm-hm. Can you tell us why -- 2 what was -- what aspect was amended, or the reasons 3 why it was re-referred? 4 MR. DURHAM: I'll need to go back and look 5 at that. That should have been on the weekly. But I 6 can go back and double check that specifically. 7 For Senate Bill 577, this is the State Board 8 of Equalization, the administrator from personnel 9 services. This is the BOE's sponsor bill that amends 10 Government Code Section 15570.28. 11 It was heard on April 24th in the Senate 12 Gov. and Finance. And it was passed onto the 13 Appropriations Committee. And it is scheduled to be 14 heard on May 6th. 15 MS. COHEN: And can you describe to us 16 Senate Bill 577? 17 MR. DURHAM: That is the one where we're 18 amending Government Code 15570.28. And we're just 19 kind of saying this is -- this is the part in which 20 CDTFA will provide administrative and personnel 21 services to the Board of Equalization. 22 And we're coming back and basically saying 23 they're providing those services, but there's a lot 24 of upfront work that we need to be doing. For 25 example, forms, and so forth. 26 So we're just kind of clari -- we're just 27 adding one line to that. 28 MS. COHEN: Mm-hm. So it's clarifying 6 1 language? 2 MR. DURHAM: Pretty much, yes. 3 MS. COHEN: Okay. 4 I'm sorry. One more question. Because in 5 my notes I don't have it. 6 Who is carrying Senate Bill 577? 7 MR. VAZQUEZ: Ben Hueso. 8 MS. COHEN: Okay. 9 MR. DURHAM: Correct. Thank you. 10 MS. COHEN: That's what I thought. Thank 11 you. 12 MR. DURHAM: So for Senate Bill 791, I 13 notice that this this bill is going to be brought up 14 later in the meeting, in the agenda. So I will be 15 presenting the legislative portion. And with me is 16 Mr. Yeung, who will discuss this from a program 17 aspect. 18 But first off, what this bill does is this 19 is a property taxation valuation on certificated 20 aircraft. And this bill will establish a new formula 21 for allocating the taxable value of certificated 22 aircraft. 23 It changes the representative period for 24 measuring aircraft presence in California for value 25 allocation purposes; therefore not requiring the BOE 26 to designate a representative period. 27 And it also re-establishes the local 28 centralized administrative procedures using a, quote, 7 1 lead county system. This is heard on April 24th in 2 the Senate Gov. and Finance Committee. And it also 3 passed on to the Appropriations Committee. And it 4 also set for hearing on May 6th. 5 This is an urgency bill, and, therefore, it 6 must pass by two-thirds vote from each House. And it 7 takes effect as soon as its passed, signed, and 8 chaptered. 9 So what this means is that the BOE needs to 10 be developing emergency regulations, forms, letters 11 to assessors prior to the operative date of 12 January 1st, 2020. 13 MS. COHEN: Ms. Fleming, do we have the 14 ability to do that? 15 This is in reference to Senate Bill 791. 16 It's an urgency bill. I believe you spoke about it 17 on your priority list; is that right? 18 MS. FLEMING: Yes, ma'am. Thank you. 19 So as was discussed earlier, the bill is in 20 process. 21 MS. COHEN: Mm-hm. 22 MS. FLEMING: And so we'll stay in contact 23 with, you know, consultants, etc., so we can track 24 the bill as it's going forward. So we'll get some 25 indicators as it's progressing, so we'll know, you 26 know -- kind of get a sense of its passage or not. 27 I look to Mr. Yeung, because I think we're 28 pretty optimistic about it. Because it's 8 1 something -- and I don't want to steal your 2 thunder -- 3 MR. YEUNG: No. 4 MS. FLEMING: -- on what you're going to 5 present. 6 MR. YEUNG: No. 7 MS. FLEMING: But we would have the 8 responsibility to take a look at regulations, etc. 9 So part of what we're looking at now, and Mr. Yeung 10 will make comments about what the game plan is to get 11 us ready for should it pass. 12 MR. YEUNG: Yes. 13 MS. FLEMING: We will have a responsibility 14 to that. 15 MR. YEUNG: Right. 16 MS. COHEN: Thank you. 17 Just a second. 18 Mr. Schaefer. 19 MR. SCHAEFER: I would just want to ask 20 Ms. Fleming, what is a certified aircraft as opposed 21 to uncertified? 22 MS. FLEMING: The certificated aircraft. I 23 don't want to steal your thunder. 24 MR. YEUNG: The certificated aircraft, 25 it's -- right now, can I -- if I can -- can I get 26 back to you on what the distinction between the 27 certified -- the certificated and non-certificated 28 aircraft is? 9 1 But this provision of law sets forth a 2 specific way to treat this type of property. And 3 this type of property, by the way of history, has 4 been before the Board a couple of times. And it has 5 been before the Board in the desire to designate a 6 different representative period. And it covers this 7 type of certificated aircraft. 8 If you allow, I will bring back -- 9 MR. SCHAEFER: Well, if we don't really need 10 the word in there, I'm sure you would eliminate it. 11 So there's some historic reason for it. 12 MR. YEUNG: There is a historic reason for 13 it and a distinction between that, which is not -- 14 What was that? 15 Oh, it's -- that type of aircraft, the FAA 16 has certified. So we're -- they're talking about a 17 very specific type of aircraft that the FAA, through 18 their statutes, are certified, and some are not. So 19 I -- 20 MR. SCHAEFER: All right. That's fine. 21 Thank you. 22 MR. YEUNG: Of course. 23 MR. SCHAEFER: You don't need to get back to 24 me. 25 MR. YEUNG: Okay. Okay. 26 MS. FLEMING: Madam Chair, did that address 27 your question? 28 MS. COHEN: Thank you. Yes, it does. 10 1 MR. DURHAM: And then the other thing I want 2 to talk about just real briefly is the split roll, 3 and let the Board know we are tracking this. 4 This does go to the voters on November 3rd, 5 2020. And it is -- we're working with Dave and his 6 group to look at this, look at the resources, and 7 look at what it's going to take if this does have to 8 go through. 9 But, again, we will be adding this to the 10 weekly status for one of our bills of interest. 11 MS. COHEN: Thank you. 12 MR. DURHAM: And with that -- 13 MS. COHEN: Does that conclude your 14 presentation? 15 MR. DURHAM: It sure does. 16 MS. COHEN: All right. Thank you. We 17 appreciate the thoroughness and the detail. I 18 certainly do. 19 Colleagues down on my left, do you have any 20 questions? 21 Mr. Gaines, nothing? 22 How about on the right? You guys have any 23 questions? 24 Mr. Vazquez. 25 MR. VAZQUEZ: Just a quick note. 26 When I actually had a meeting with LA County 27 Assessor Jeff Prang, specifically to the aircraft 28 bill that you're referring to, when we looked at the 11 1 language, it looked like it was taking us out of it. 2 But it actually -- it isn't. And you might want to 3 make sure that they're clear on the language as it 4 moves forward. 5 Because when you read it, it was kind of 6 stating that basically the BOE would have nothing to 7 do with it moving forward. But he clarified it, and 8 he said, "No, that's not the intention." And he 9 realized when he read it back to himself that it was 10 a little vague. So they were going to make those 11 corrections. 12 So you might want to just -- 13 MR. DURHAM: Okay. 14 MR. VAZQUEZ: -- make note of that as you're 15 looking at it. 16 MR. DURHAM: Thank you. 17 MR. VAZQUEZ: Because he had no problem. He 18 was more interested in just -- I guess he's the chair 19 of this committee through the assessors that's 20 actually looking at this statewide. So -- and he has 21 no intentions of taking the over -- at the end of the 22 day, the oversight of this by the BOE. 23 MR. YEUNG: Yeah. 24 May I? 25 MS. COHEN: Yes. 26 MR. YEUNG: Yes, you are correct. It 27 doesn't -- it does not remove the Board's oversight 28 function, per se. We still are responsible for the 12 1 forms, we're still responsible for promulgating the 2 rules and the regulations that would take to 3 implement this legislation. 4 The only part where it changes the Board's 5 direct involvement is the designation of the 6 representative period. 7 MR. VAZQUEZ: Correct. 8 MR. YEUNG: Under the new -- under the new 9 statute, it would be 365 days. It would be the whole 10 calendar year of the last year. 11 So it removes that part out of it. But it 12 would -- we would still use Board data. We would 13 still use a lot of the Board -- we would use the 14 Board forms, Board guidance, and the Board 15 promulgated rules. 16 MR. VAZQUEZ: Yes. I just wanted you to be 17 aware of it as you move forward. Because when you're 18 first -- on the first read, then he understood it 19 when he read it back himself. 20 MR. YEUNG: Right. 21 MR. VAZQUEZ: It was kind of misleading. 22 MS. COHEN: All right. Are there any other 23 questions? 24 No. All right. 25 Thank you very much. 26 ---oOo--- 27 28 13 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization, certify 9 that on April 30, 2019 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 13 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: July 26th, 2019 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 14